Young buyers snatching up Cape Town property - with help
When the Boomers met their Generation X offspring, their first thought was, ‘this kid is going to have an even better life than we did’. And for the most part, they kept their promise, but the one thing they couldn’t do was control the price of property.
Wener says younger buyers are active inDevil’s Peak, Walmer Estate and Woodstock. Further from the city centre, under-35s account for 50% and more of home sales inMaitland, Lansdowne, Thornton, Crawford andSybrand Park.
The starter house that they bought in 1974 for R10 000 and sold a while later for R15 000 is still pretty shabby today, and not in the best area, but the price is now into the millions. This for a row house behind the suburban train station latter-day Generation Xers would be hard-pressed to buy.
This is according to Laurie Wener, MD of Pam Golding Properties Western Cape Metro region, who says this would be the case without a boost from their parents. And this is where many Boomers are having their encore as first-time property owners, she says.
“The buyers aren’t first-timers, but the properties are often entry-level homes that they are either buying, or helping their kids to buy.”
According to Lightstone statistics, between 50% and 61% of residential properties sold inRondebosch East and nine other middle-income suburbs go to 18 to 35-year-olds, many of whom are doing it, at least in part, with parental funds.
She says younger buyers are active in Devil’s Peak, Walmer Estate and Woodstock. Further from the city centre, under-35s account for 50% and more of home sales in Maitland, Lansdowne, Thornton, Crawford and Sybrand Park.
There’s nothing very new about parents buying their kids houses. They have been since way before the generations started being named, but the big difference is that now it’s not always a matter of choice.
This three bedroom, one bathroom cottage for sale in Woodstock has wooden floors throughout, as well as its original Victorian fireplace. The home has a secure, private garden with a fountain, and is selling for R2.999 million - click here to view.
“People are sending their children into tertiary facilities on a massive scale right now. Anything other than an education capped by a degree is death to career hopes in South Africa’scompetition-driven job market,” says Wener.
This means the kids have to be housed away from home, because universities are fairly thin on the ground and based in big centres.
‘‘Whereas in time gone by, the folks would grit their teeth and stump up for res fees, now there’s an added complication; there are just not enough rooms for students in official residences, or even private digs, and the fees are prohibitive.”
This has had an interesting outcome, she says. Combined with frustration at uncertain returns from equity market retirement investments, and a need for extra bricks and mortar, late Boomers are opting for second homes to house their student offspring.
“Residential property continues to be one of the most reliable investments, and the upside is, when the student kids graduate, there’s a chance to cash out, or keep the house and start charging rent. Meantime, the capital gain has done its bit to maintain the investment value.”
One of the highest incidences of youth/adult buyers is in the Cape Town City Centre. Buyers in this category account for 45% of recent sales, followed by Sea Point at 34%, then Camps Bay at 23% and Bantry Bay at 13%, according to statistics researched by PGP Atlantic Seaboard andCity sales manager, Basil Moraitis.
This five bedroom, four bathroom home for sale in Walmer Estate has a private courtyard. Three of its bedrooms are en suite, and the house has off-street parking for one car. It is on the market for R2.5 million - click here to view.
“What is of interest is that while young people are marrying later than their parents did, or not marrying at all, the provident teachings of the older generation have resulted in home buying among the youthful, and parents have to put their money where their mouth is to support their earlier sage advice about property investment,” she says.
The home market has worked for millions of middle-aged and older South Africans who mostly got their houses when the country’s residential property market was one of the most undervalued.
The correction, when it came, potentially put a lot of money in home investors’ pockets, and their kids have seen the benefits of purchases and sales over the years that have bought their families cars and education.
Even with a rising price structure, Weber says there was still fat in the sale of a property, with room for another buy.
“Now, the younger generation is scrabbling to buy property so they can get a stake in the market that’s fast gaining values that could put first-timers out of the running. It’s good to see the basics of economic survival are being serviced,” says Wener.